“I didn’t come here to appease anyone. My responsibility is to do what is right for Israel’s economy,”

 

'I'm not hurting the haredim, I'm helping them'

 

"Shas and UTJ are the ones harming haredim by ensuring that they will always be dependent on handouts. My goal is to pull them out of poverty."

Finance Minister Avigdor Liberman checks food prices at a Jerusalem supermarket.

“I didn’t come here to appease anyone. My responsibility is to do what is right for Israel’s economy,” declared Finance Minister Avigdor Liberman at the beginning of a briefing for journalists in Jerusalem. “I am not expecting to be popular, but I am prepared to do what is necessary. The most important thing is to make the treasury normal again, after two-and-a-half years without stability.”

 

“My dream would be to maintain 5% economic growth for the next four years,” Liberman added.

Liberman discussed the treasury’s plans for the upcoming years, as well as the many controversies and surprises that have already come up during his first 30 days in office. And there have been many.

 

Liberman enflamed the ultra-Orthodox community last week when he revoked child care subsidies for fathers studying full-time in yeshiva, saying that both parents must now work or study in a non-religious educational institute for at least 24 hours a week in order to receive the benefit.

 

“I heard them calling me a Cossack,” Liberman said. “But I didn’t reinvent the wheel. Netanyahu did something similar in 2003 as finance minister and Yair Lapid did so in 2012, and both times, it boosted ultra-Orthodox participation in the labor market.”

 

“My intention is not to harm them, it’s to help them,” he continued. “Shas and United Torah Judaism (UTJ) are the ones harming haredim by ensuring that they will always be dependent on handouts and interest-free loans. Their biggest opposition is to teaching the core curriculum to be taught in schools, depriving students of an education so they’ll have a captive audience during elections. My goal is to pull the haredi community out of poverty so people can earn a living honorably.”

 

Liberman emphasized his goal of increasing economic growth without raising taxes by making structural changes to improve efficiency. A plan presented last week to significantly reduce excess bureaucracy in government offices should add an extra NIS 8 billion to state coffers each year for the next five years, he said, citing OECD economists.

 

Two units within the Finance Ministry have already been closed because they were redundant, with similar tasks being filled in other ministries, he noted.

 

Regarding Israel’s housing crisis, Liberman attributed high real estate prices to two main factors: the lack of housing available, and the glut of cheap money available for buyers due to record-low interest rates. While real estate prices rose an average of 5.6% in the past year, Israelis took a record-high NIS 11.6b. mortgages in June.

 

“The housing market is not in a bubble,” Liberman said. “People have saved money and they have no other viable investment channels, so they are putting it into apartments.”

 

In order to restore balance to the real estate market, Israel needs to build 75,000 new units a year, Liberman said, instead of the approximately 50,000 a year that has been added since 2016. Liberman added that he is totally on board with Interior Minister Ayelet Shaked’s plan to introduce an updated version of the Tama 38 urban renewal plan by November.

 

That being said, the Finance Ministry has no target price level or forecast for the housing sector. “Our goal is only to restore the balance between supply and demand,” said Finance Ministry Director-General Ram Belinkov. “Any attempt to lower prices artificially would not be a serious response.”

LIBERMAN stressed that his most immediate goal is to have a budget approved in November for 2021 and 2022. An initial budget will be presented to the cabinet as early as August, and there will be time for initial readings and discussions.

 

“We won’t have time to solve all of Israel’s problems in the next four months, and some things will have to wait,” he noted. “Since we have such a short time, we are trying to focus on the things where there is most agreement.”

 

While some in the opposition have indicated that they would try to use the budget to bring down the coalition, Liberman said he was unconcerned. “Even in the opposition, most people do not want to go back to the polls. The most wrong thing would be to drag in a fifth election,” he said.

 

Israel finished 2020 with a budget deficit of 11.6%, after a 4.2% deficit before the pandemic, and the deficit currently stands at 10.1%, Belinkov noted. It is not unrealistic to expect that Israel will cut the deficit to 7.1% by year’s end, he added.

 

Regarding the cost of living, Liberman visited a nearby supermarket before the briefing to check on prices. “How much did avocado cost? There was no avocado in the supermarket. Peaches were NIS 21 a kilo. There will need to be changes in this sphere, but we won’t be able to address them in the upcoming budget.”

 

Asked how a clause in the Economic Arrangements Law that would raise residential property taxes is consistent with his promise not to raise taxes, Liberman responded that such property taxes go to local authorities, not the treasury, and therefore are not considered taxes.

 

Another item that came out of the Economic Arrangements Law was the proposal for a traffic congestion charge for drivers in the Tel Aviv area. Asked about Transportation Minister Merav Michaeli’s opposition to the bill, he backtracked: “ I’ll honor whatever the transportation authority decides on this.”

 

Another clause of the law would gradually raise the retirement age for women from 62 to 65 by 2032. “Life expectancy is now 84 years, compared to 66 years several decades ago,” Liberman commented.

Regarding Israel’s hi-tech sector, “every shekel that Israel invests in innovation returns five shekels,” the finance minister said. “It is the engine of Israel’s economy. I don’t want to think about where Israel’s economy would be without it.”

 

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